One-Hour Delivery in Retail

David Wagner, Managing Editor | 12/4/2012 | 44 comments

David Wagner
Forget in-store pickup. This year’s battle between brick and mortar and e-commerce is around same-day delivery.

The race is on for CIOs to deliver products to the door of their customers practically before they even think of buying them. It started with Amazon promising same-day delivery of products in major metropolitan areas. It continued with Walmart taking advantage of its large network of brick and mortar stores, and incredible supply chain, to offer the same thing across most of the country. Now, Ebay is raising the stakes by offering one-hour delivery in San Francisco and New York City.

If all of this seems a bit excessive, remember that the battle here is bigger than just who can get a product to the door the fastest. It's about the constant battle between traditional retail and e-commerce. Because of the low overhead and favorable tax rules, e-commerce vendors often experience an advantage in price. For brick and mortar retail to survive, they have to offer an experience that is better than online shopping.

The biggest threat to retailers is scan and scram (also called showrooming), where consumers go to the brick and mortar store to touch a product, but then order it online. The biggest advantage to brick and mortar stores is the “I can have it in my hot little hands right now” impulse. Consumers are constantly asking themselves if the small savings is worth waiting the shipping time.

Store pickup was one way to marry e-commerce with brick and mortar presence, but same-day delivery has trumped it. Likewise, one-hour delivery, if economically feasible, makes same-day delivery look snail-like. Retailers are in real trouble if the “I can have it now” advantage is taken from them.

Right now, Ebay’s attempt is relatively low-tech. It has a group of young people in cars who receive orders through smartphones. They drive to the store, purchase it like anyone else would, and take the product to the customer. Ultimately, it's unlikely something like that could scale, but eBay knows that and has plans -- as it builds a customer base -- to include partnerships with retailers to pull product before the courier arrives.

The key, of course, isn’t the exact method, but the race itself, and the fact that CIOs are smack in the middle of it. Shortening the supply chain, and connecting it from the warehouse to the customer’s house, is going to require some technical wizardry -- and working with the CMO.

If you’re still counting on the post office and three-day shipping, here are some things your CIO can do to get into the fray:

Get tight with your customers -- Whether you’re brick and mortar or online, if you can’t figure out what your customer needs, you can’t get it to them fast enough. If you and your CMO use data mining to put the right products in the right locations (store and warehouse), you’ve won half the battle.

Showrooming is shopping -- Most CMOs are trained to think of the buying decision and the sale as a joint process. The customer looks at the product, and then takes it up front to pay. For a decade, the advantage of brick and mortar was that the customer had to go home to make the online purchase, and CIOs had to think of it that way. Now, with mobile devices, consumers can buy the device in the store from someone else, so CIOs and CMOs both have to think of the process as an in-store experience -- even if it isn’t your store.

Short delivery times mean more mobile -- Whether you’re using a smartphone to communicate with a courier, or you’re relying on UPS or Fedex the way Amazon and Walmart are, your supply chain is increasingly gaining contact points. Managing them all is going to require some planning.

Whether Ebay, or anyone else, can make one-hour delivery work is definitely beside the point right now. The space between brick and mortar and online is continually collapsing, and CIOs on either side of the battle need to make sure they’re not left behind.

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tjgkg   One-Hour Delivery in Retail   1/7/2013 9:46:54 AM
Re: One Hour Delivery
With regard to FedEx and UPS complaining about the USPS, they got lucky with the advent of email. Once email replaced a large part of the USPS revenue, it opened the door for FedEx and UPS to really compete. Additionally Congress has saddled the USPS with exhorbitant funding requirements for benefits which is killing the USPS.
SaneIT   One-Hour Delivery in Retail   1/7/2013 7:23:12 AM
Re: One Hour Delivery
Like many other markets the larger companies can cut prices in the short term to push the local companies out. We heard the same thing with big box stores in the past and we heard the same thing from the delivery companies complaining about the US postal service.  Now it looks like they have found a pond where they are the big fish but they forget all the complaining they did in the past.  For some people this might mean that for the first time the realize that they can get retail items delivered to their home or business since the smaller courier services are bad about advertising.
tjgkg   One-Hour Delivery in Retail   1/6/2013 9:22:31 PM
Re: One Hour Delivery
Unfortunately I do think one hour delivery will further shrink the local market. Unless larger companies can't make money in an area. Then local companies will prevail.
tjgkg   One-Hour Delivery in Retail   1/5/2013 4:41:12 PM
Re: One Hour Delivery
@CMTucker: Actually it is a little of both. It is globalisation because companies feel compelled to have branches all over the place. It is business because the mom and pop stores do not have the capital to compete with their large competitors. It is sad really because part of the fun of going to different cities and countries is getting something that is unique to that place. That is becoming harder to do. Hell you can even get a Whopper above the Arctic Circle (I did).
batye   One-Hour Delivery in Retail   1/1/2013 11:24:17 PM
Re: Eh
same here, I would prefer pay more but get my item faster... time is worth more than money...
angelfuego   One-Hour Delivery in Retail   12/24/2012 2:40:32 PM
Re: Eh
@Damian, It truly is worth it for the convenience and peace of mind. It is like you are paying to avoid a hassle and drama. Paying the fee is a way to avoid being put to the test of being in public and having a meltdown or creating a scene. Sometimes, shopping with kids is a recipe for disaster, especially during the holidays. Holiday shopping is rough, even without kids in tow, but the stress can be multiplied when the kids are in tow.
angelfuego   One-Hour Delivery in Retail   12/24/2012 2:35:51 PM
Re: Eh
@tinym, I agree. The extra $20 is totally worth it to me.
tinym   One-Hour Delivery in Retail   12/8/2012 1:28:32 PM
Re: Eh
@Damian I think the extra $20 is worth the time and tears spent shopping with small children. Now that mine are older, shopping is much better. I don't like spending an hour or two at the store even when kids are behaving. I always feel like I could be doing something better with that time. Food is wonderful but food delivered to my door would be great.
Technocrat   One-Hour Delivery in Retail   12/7/2012 11:22:13 PM
Same Day Delivery: Tall Task ?
This same day delivery would represent a major challenge for most CIO's, I would think.  It is a very interesting challenge to pull all of these facets together to provide that type of real time response, especially during he holidays. 

I wasn't aware E-bay is pioneering this effort, and it will be interesting to see how successful they are with it because if they can pull it off, it could revolutionize on-line shopping, but I just don't thing it becomes possible after a certain number of customers have been achieved for that day for instance. This number in my mind is finite.
Damian Romano   One-Hour Delivery in Retail   12/7/2012 12:46:25 PM
Re: Eh
@David - I'd have to say our Boston Terrier, Owen. :)
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